AAII Sentiment Survey: Neutral Sentiment at an Unusually High Level

The percentage of individual investors describing their short-term outlook for the stock market as “neutral” is at its highest level in more than eight months. The latest AAII Sentiment Survey also shows a drop in optimism and slightly higher pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 4.7 percentage points to 37.2%. The historical average is 38.0%. Last year (2019), optimism was above its historical average just 12 times.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 4.3 percentage points to 40.9%. This is the highest reading since April 24, 2019 (46.3%). Neutral sentiment is above its historical average of 31.5% for the 32nd time in 33 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 0.3 percentage points to 21.9%. Bearish sentiment is below its historical average of 30.5% for the 11th consecutive week.

Neutral sentiment is now at an unusually high level. The typical range is 23.1% to 40.1%. Such readings have historically been followed by above-average six- and 12-month returns for the S&P 500 index. Pessimism remains near the lower end of its typical range. Readings below 21.9% are unusually low.

The recent trade agreement between the U.S. and China boosted optimism among some but not all AAII members. Also influencing individual investors’ market outlook is Washington politics, earnings growth, the economy, valuations and last month’s record highs.

This week’s AAII Sentiment Survey results:

• Bullish: 37.2%, down 4.7 percentage points
• Neutral: 40.9%, up 4.3 percentage points
• Bearish: 21.9%, up 0.3 percentage points

Historical averages:

• Bullish: 38.0%
• Neutral: 31.5%
• Bearish: 30.5%

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/sentimentsurvey.

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See more Sentiment Survey results.